Amazon Dropshipping Guide

Disclaimer: It’s currently not possible to dropship on Amazon using the Oberlo app.

With the recent addition of the Amazon sales channel on Shopify, Shopify store owners can now sell on Amazon. In this Amazon dropshipping guide, you’ll learn what dropshipping is, how to start dropshipping on Amazon, the benefits of dropshipping on Amazon, Amazon success strategies, Amazon tools and how to sell on Amazon.

What is Dropshipping?

Dropshipping is the process of selling a product without the responsibility of carrying inventory or shipping the goods. Notably, dropshippers can set their own product prices. The product manufacturer is responsible for manufacturing the product, maintaining inventory and shipping the goods to the customer.

Benefits of Dropshipping

In this Amazon dropshipping guide section you’ll learn some of the benefits of dropshipping that’ll help you understand why and how to dropship on Amazon.

Hold no inventory

The biggest benefit of dropshipping is that the dropshipper doesn’t need to carry any inventory. This is great because it makes the business model less risky for the dropshipper. As there’s no inventory to carry, there is less work involved in the business. In addition, there’s also fewer costs as you don’t need to pay for a warehouse to hold the inventory.

Few skills needed

Few skills are needed to have a successful dropshipping business. A dropshipper needs to be great at marketing, administrative tasks and providing excellent customer service. If a dropshipper can master those three skills they can achieve great success. With great marketing skills they can attract more customers. Since they don’t carry inventory, they can intensify their marketing efforts as they don’t need to worry about inventory or the cost of labour associated with shipping products. Within the realm of administrative tasks the dropshipper will need to process orders, pay for taxes and expenses and more. Lastly, by providing excellent customer service they can maintain positive relationships with the customers who’ve purchased from them.

Easy to start up

Starting a dropshipping business is relatively easy. You can set up a store within a day using Oberlo. All you need to do is choose products from an Oberlo supplier. There are three types of suppliers inside Oberlo: Oberlo Verified suppliers, Oberlo suppliers, and AliExpress. Compared to buying inventory for your store, you don’t need to wait to receive inventory or take product photos. With dropshipping, you can easily import product details such as specifications and images. This saves your business time and money.

Test products easily

Another great benefit of dropshipping is that you can test products easily. Since you don’t carry inventory, you can run ads on products to see which products convert best. If certain items aren’t high performers you can remove them from your store easily. Since you didn’t purchase inventory, there’s no cost, aside from advertising, for a low performing product. In the event that you want to eventually purchase inventory, you’ll also know which products sell well as well as how many SKUs you can sell easily.

Low start-up cost

The dropshipping business model is low cost. First, you only purchase products when a customer places an order. Second, there’s no warehouse needed for inventory. Third, you don’t need to hire extra employees to manage the shipping of products. Next, your main expenses include cost of goods, advertising, and website.

Amazon Dropshipping Guide – Benefits of Amazon Dropshipping

In this Amazon dropshipping guide part, you’ll learn some of the benefits of Amazon dropshipping and how to dropship with Amazon.

No warehouse cost

One of the benefits of Amazon dropshipping is that you don’t need to pay for the cost of a warehouse. Some Amazon sellers choose to make their products FBA (Fulfilled by Amazon). With FBA, sellers ship their products to Amazon and Amazon sends the products out for them.

Amazon Suppliers

Amazon sources suppliers within Europe who they buy products in bulk from. Amazon then holds this supply in their warehouses ready to ship to customers, handling returns and customer service in many different languages for all Amazon suppliers. With Amazon, suppliers, even small businesses, can grow quickly and operate globally. Amazon suppliers receive help from account managers to strategically guide their business to increase profits long-term.

Large audience to sell to

Notably, Amazon has 300 million active users. Thus, having Amazon as a sales channel for your business can mean huge returns. Sell the right product at the right price and you can lure in new customers. Your online store may attract different customers than Amazon. Thus, giving you an opportunity to connect with new customers who don’t fit your target demographics.

Lower ad spend

You have the option to run Amazon ads to gain sales and build a positive reputation on Amazon. However, as a marketplace, you can also benefit from organic traffic. By putting in upfront effort into optimizing your page, you can increase your odds of receiving organic traffic. Also, the cost of Amazon ads is set by you. You can control how much or how little you want to spend on Amazon ads as there’s no minimum requirements.

Amazon Dropshipping Cons

Amazon has created restrictions which can prevent dropshippers from selling on the platform. They do allow dropshippers to sell on the platform. However, they can only dropship via Amazon’s FBA program. That’s why it can be a bit tricky at first to understand how to dropship on Amazon. Using Oberlo is against their terms of service. According to their Dropshipping Policy, it states, that “Purchasing products from another online retailer and having that retailer ship directly to customers” is not permitted.

How Amazon Works

Amazon is one of the biggest ecommerce websites. It grew in popularity because it allows retailers to sell their products on their platform. Manufacturers and brands are able to sell on Amazon as an additional sales channel for their stores. After being approved for an Amazon seller account, you’ll be able to start selling on Amazon. However, not all brands and products get approved.

So, how exactly do you start dropshipping on Amazon? You can dropship on Amazon through their Fulfilled by Amazon program. In this program, you ship your products to Amazon where they carry the inventory and ship directly to your customers. The benefit of this program is that Amazon has some of the fastest shipping times on the market so your customers get their products even sooner.

Amazon Dropshipping Guide: Amazon Strategies

In this part of the Amazon dropshipping guide, you’ll learn a few strategies for succeeding on Amazon.

Win the Buy Box

Most of Amazon’s sales comes from the buy box. Thus, your goal as a dropshipper is to win the buy box so you too can maximize your sales. First, you’ll need to have a high seller rating. Many have found having a rating above 95% has worked well for them. Second, you need to ship products quickly, ideally within 14 days. Third, your cost (shipping and product cost total) should be lower than most of the other offers being presented. Having a low refund rate, fast customer response time and high feedback score also help you win the buy box.

Don’t rely on Amazon

Don’t be dependent on sales from Amazon alone. Have your own store too. By having Amazon as one of many sales channels, you improve your odds for sales while minimizing risk. Also, if a customer recognizes your brand they’ll be more likely to buy from you on Amazon. Be where your customers are.

Aim for a 95% seller rating

Having a 95% or higher seller rating has improved the likelihood that you’ll win the buy box. It’s also great because it makes you more likely to appear in organic searches. Also, it’s important to have a high seller rating as customers will be more likely to trust you if your rating is high. It gives your Amazon store a competitive advantage over those with lower ratings.

Do keyword research

Just as you’d optimize your store’s product pages for search engines, when you’re learning how to dropship on Amazon, you should optimize your Amazon product pages as well. You can use tools like Merchant Words to determine popular keywords. If you run Amazon ads you’ll also have access to a supply of keywords you can optimize your product pages. Doing this well will help you rank organically. If you’re running ads, it’ll help you target customers better.

Make sure you price your products accordingly

When pricing products for Amazon there are a few factors to consider. First, is the cost of Amazon fees. You want to ensure your margins are high enough that you can afford to pay Amazon’s monthly and other associated fees. Second, you want to ensure your margins are high enough to make a profit. When you dropship with Oberlo, you can often offer free or cheap shipping which allows you to stay competitive as well.

Offer a better coupon discount than competitors

By creating an Amazon coupon, you can help encourage customers to buy from you. If you promote the coupon to coupon sites you can help drive more traffic from those looking to score sweet deals. Remember that you need to price the coupon in a way that allows you to pay your expenses and remain profitable.

How to Dropship with Amazon?

Dropshipping on Amazon is generally acceptable. However, they have listed a set of dos and donts that you need to keep in mind if you are planning to use Amazon Dropshipping.

You must always:

Be the seller of record of your products;

Identify yourself as the seller of your products on all packing slips and other information included or provided in connection with them;

Be responsible for accepting and processing customer returns of your products; and

Comply with all other terms of your seller agreement and applicable Amazon policies.

Examples of dropshipping that is not permitted:

Purchasing products from another online retailer and having that retailer ship directly to customers; or

Shipping orders with packing slips, invoices, or other information indicating a seller name or contact information other than your own.

You can read more about how to dropship with Amazon on their website here.

Amazon Dropshipping Tools

Here are a list of tools that will come in handy when you’re learning how to start dropshipping on Amazon.

FeedCheck – FeedCheck allows you to view all your product reviews in one place. If you have a large selection of Amazon products on your store, this is a great tool. By having easy access to reviews, you can work on improving your reviews while providing better customer service. It also allows you to monitor competitor’s products. Their pricing starts at $19/month.

Shopify – You can use Shopify to add Amazon as a sales channel on your store. Also, Shopify can be used to track your inventory. It’ll also alert you if you have Amazon sales you need to fulfill.

Sellery – This tool helps you win the Amazon buy box with its repricing strategies. It allows you to run pricing experiments to stay competitive while maximizing profits. You can try this tool for free.

Feedback Express – Feedback Express helps you get more reviews on your Amazon store. It also helps remove negative reviews so that you can maintain a high rating on your products and store. You can even blacklist customers who are notorious for leaving negative reviews. Pricing starts at $20/month.

Amazon Volume Listing Tools – Amazon offers various tools to simplify your seller experience. You can easily download spreadsheets regarding order and inventory information. You can also modify pricing and product quantity with ease.

How to Sell on Amazon

Choosing an ecommerce platform

As Shopify recently partnered with Amazon, using their ecommerce platform would be ideal. Shopify allows users to add Amazon as a sales channel to simplify managing orders on both platforms.

Do you sell the right products?

There are several requirements and restrictions that store owners must follow if they want to sell their product on Amazon. According to Amazon’s list of eligible stores, Amazon niches like books, computer and video games, electronics, office products and more can open up an Amazon store without approval. Notably, Amazon also created a list of restricted products for various Amazon niches which includes hoverboards, dangerous good and more which cannot be uploaded and will not be approved.

Create an Amazon seller account

If you plan on selling a high volume of products, it’s best to have a professional account. In the individual selling plan, you’re charged 0.99 cents per item sold which can eat away at your margins. Keep in mind that you’ll also need to offer competitive pricing, the occasional discount, while ensuring you make a large enough profit to reinvest in the business. Thus, it’s important to have decent margins. With a professional seller account you pay a subscription each month as well as a few additional fees.

You’ll want to register with your email on Amazon Seller Central. Then, You’ll need to fill out your name, email, and password. You’ll continue being directed to new screens where you’ll provide more details about your business such as address and tax information.

Get approved in your product category

As mentioned earlier, certain niches and product types require Amazon approval. Fashion, Beauty, and Jewelry are some of the popular niches that require approval before starting up your Amazon store. You can view the specific approval requirements for each category.

Set up your Amazon account on Shopify

Once you’ve been approved and your account is created, connect your Amazon account to your Shopify store. On the left panel in your Shopify account, scroll down to Sales Channels and click on the + button beside it.

You’ll have a pop-up come up. Amazon should be the first item on the list. Click Add Channel.

Then, Add Channel. You’ll need to then continue with ‘Connect to Amazon’.

Create Amazon product listings with ease

Click on the Amazon sales channel link, see Shopify’s left panel. Click create listing. Next, click Select Product. You’ll see two options. If your brand makes the product, you’ll need to make sure you purchase UPC codes. However, as a dropshipper, you’ll click on the second option ‘This product is made by another brand.’ Next, you’ll be able to search for the product to become a seller for that SKU. Then, once you’ve found the product click Select. Lastly, you’ll need to Publish for the process to be completed.

Have Shopify track inventory

Make sure that Shopify tracks inventory levels. This ensures that when a customer orders on Amazon that the product is still in stock. Notably, don’t allow customers to order products that are out of stock as this can lead to negative reviews.

Start promoting your Amazon store

Then, you’ll have to send traffic to your Amazon store in order to encourage sales. You can create Amazon ads to help boost sales.

Dropshipping from Amazon to eBay

Dropshipping from Amazon to eBay is a dropshipping model that has been used for many years. This model sees sellers buying underpriced items on Amazon and selling them for a higher price on eBay. This normally means that the end user, who bought the product from eBay, will receive the product in Amazon packaging which is not a great user experience for them. Although it is not illegal to partake in this dropshipping from Amazon to Ebay, it is frowned upon by manufacturers as this model increases profits for the dropshipping without the manufacturer knowing about the activity. If you aim to build a reputable dropshipping business it is best to stay away from this model.

Want to Dropship for Your own Brand Instead?

Don’t want to sell on Amazon? Those who want to dropship their own products can use Oberlo to dropship from a massive selection of suppliers. Oberlo Verified suppliers are the most trusted suppliers in the Oberlo network, having been vetted by the Oberlo team to ensure that they have shipped more than 1,000 products, with 95% or more of products being shipped out on time.

Want to learn more?

Best of luck generating more sales with your new Amazon sales channel. Have you tested it out? Let us know how it goes in the comments below!

Nicole Martins Ferreira

Nicole Martins Ferreira

Nicole Martins Ferreira is a content marketer at Oberlo and experienced ecommerce entrepreneur. She’s been building online stores since 2013 and sharing her secrets with Oberlo users since 2016. Follow Nicole on Twitter at @NicoleMarFer.

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